NC lawmakers push for end to loophole that benefits foreign workers

North Carolina lawmakers are taking aim at a loophole allowing companies that receive state job-creation grants to fill those positions with workers brought to the U.S. on visas.

At issue is the H-1B visa, a federal program highly popular among employers in Charlotte and elsewhere for letting companies hire skilled foreign workers on a temporary basis. The decades-old program has also drawn criticism, including from President Donald Trump, who has said the visas are being abused to replace American workers with cheaper foreign labor.

On Thursday, India-based outsourcing giant Infosys became the latest firm that relies heavily on visa workers to be granted millions of dollars in taxpayer-funded incentives from North Carolina. For its part, Infosys said it will hire only Americans for 2,000 jobs it will create in exchange for a $25 million incentives package to put a new tech hub in Wake County.

Such assurances aren’t deterring lawmakers who argue companies should not even have the option of using visas to meet job-creation requirements in their incentives contracts. Legislation seeking to plug the loophole stalled in the General Assembly’s session that ended last week, but lawmakers say they will not give up.

“It’s great to recruit businesses to North Carolina, but I think the intent to bring them here is to employ citizens of North Carolina,” said Sen. Harry Brown, a Jacksonville Republican who was primary sponsor of a bill during the recent session that, among other things, targeted the loophole. He said he plans to pursue the issue during next year’s legislative session.

Democratic Sen. Erica Smith-Ingram, of Northampton County, who also sponsored the bill, argues the loophole “defeats the purpose of making sure there are jobs for North Carolinians.”

“I’m even more committed to seeing that bill passed,” she said.

Brown said the bill’s ban against H-1B workers being eligible for counting toward job totals was prompted by Observer coverage last year on North Carolina’s practice of awarding tens of millions in incentives to companies that hire foreign workers. Such awards have been granted under deals to create jobs in Charlotte as well as other parts of the state, the Observer found.

In one case cited by the Observer, Noida, India-based outsourcing firm HCL Technologies was awarded more than $19 million by North Carolina in 2014, in exchange for investing $9 million toward expanding a facility in Cary and creating 1,237 new jobs there by the end of 2018. The next year, the company filed applications for more than 2,000 H-1B workers based in North Carolina, the vast majority in Wake County.

In Charlotte, Infosys has been among the top users of H-1B visas to bring information technology workers into the metro area. The firm counts IBM, Ernst & Young and Charlotte-based Bank of America among its clients.

In a statement, Infosys said it does not plan to hire any H-1B workers at the Cary operation to meet its 2,000-job goal: “We will be hiring local American workers, none of whom need any kind of visa assistance program.”

Across Charlotte, thousands of workers on H-1B and other visas are spread across industries, from banking to healthcare, many from India. Wells Fargo, hotel chain Extended Stay America and home-improvement retailer Lowe’s have been among users of the program.

In some cases, visa workers are employed by outsourcing firms that serve other Charlotte companies. In other cases, companies hire visa workers directly to handle functions such as IT.

Supporters say the temporary visas help employers fill highly-skilled jobs that draw too few qualified applicants. Critics contend the program has been abused and contest the idea of talent shortages, noting that in some cases fired Americans had to train their foreign visa replacements.

Infosys has been among firms ordered by the U.S. government to pay fines to settle claims of visa abuse.

Last month, New York Attorney General Eric Schneiderman announced a $1 million settlement with Infosys, which was accused of “systemically abusing” visa rules. Among other things, the firm was charged with unlawfully using visitor visas to fill jobs and paying those workers significantly less than what comparable U.S. workers or H-1B visa holders would have been paid. In 2013, the U.S. Justice Department announced a record $34 million fine against Infosys to settle allegations of essentially the same practices.

In a statement, Infosys said it “maintains robust policies and procedures to ensure adherence with all applicable regulations and laws.”

It’s unclear whether Gov. Roy Cooper would support legislation that dismantles the loophole. As a gubernatorial candidate last year, he told the Observer incentives should not be used to replace North Carolina workers with cheaper foreign labor, but stopped short of promising to push for specific changes to law.

As with any legislation, Cooper would want to review the final language before deciding whether to sign or veto it, Ford Porter, a spokesman for the governor, said in a statement.

“The governor stands by his comments from last year and is focused on boosting our workforce development so we will continue to be a magnet for jobs and companies looking to locate in North Carolina,” Porter said.

It’s also unclear what will happen with the Senate bill and a related version in the House. Both bills were mainly focused on revamping how state incentives are allocated to counties based on how economically prosperous or distressed they are. The H-1B ban was a minor component of the bills and was removed from a later version of the House legislation but remained in a later Senate version.

Republican Rep. John Fraley of Mooresville, a sponsor of the House bill, said he remains opposed to the loophole. Though the bill did not leave the House, he said he expects work to continue on the Senate and House versions in the coming months and into next year.

“I think that if we are spending taxpayer money in North Carolina,” Fraley said, “we ought to try to employ people here.”